By Hannah L. Torregoza
The Senate committee on ways and means yesterday warned the government the Philippines may be violating the rules of the World Trade Organization (WTO) if it insists on passing the measure imposing a two-tier excise tax on sugar-sweetened beverages.
Juan Edgardo “Sonny” Angara, chair of the Senate ways and means panel, said it is possible the WTO may find such two-tier taxation discriminatory as the trade body generally bars its members from taxing imported product at higher rates to favor domestic products.
“As a member country of WTO, we should ensure that our tax regimes fully comply with international rules,” said Angara.
The House of Representatives recently approved the tax reform measure under the Palace-endorsed Tax Reform for Acceleration and Inclusion (TRAIN) which Angara’s committee earlier scrutinized.
The bill imposes a P10 excise tax on every liter of sugar-sweetened beverages containing locally produced sugar, while others will be taxed P20 per liter.
During last week’s Senate hearing on the bill, the departments of Finance, Trade and Industry, Foreign Affairs and the National Economic and Development Authority (NEDA) stated they do not support the two-tier system to avoid possible challenge at the WTO level.
Angara recalled that in 2011, the WTO ruled that the Philippines had violated its obligations under the General Agreement on Tariffs and Trade by taxing foreign alcoholic beverages at rates 10 to 40 times higher than brands made locally from homegrown materials such as sugar and palm.
He, however, promised that his committee would consider lowering the rates, limiting the coverage. He also proposed shifting to sugar-content taxation from a volume-based taxation.
“We do support and agree for the need to resolve the alarming increase in diabetes and obesity in the country. But consequently, I believe we should avoid unnecessarily burdening ordinary citizens with the expected increase in prices of these products,” he said.
The senator noted that with the current proposal, prices of some sugary drinks will increase by 50 percent. This is much higher compared to other countries that imposed similar taxes, he said.
Tags: Manila Bulletin, Senate, Senate panel cautions gov’t on beverage tax, Senate ways and means panel, sugar-sweetened beverages, sugar-swetened beverages, two-tier excise tax, World Trade Organization
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